Steag v CIR
, but SC denied in a Minute Reso;
G.R.. No. 205282 | January 14, 2019 | Leonen, J.
Topic: Right to Refund of Taxes
Petitioner: Steag State Power, Inc.
Respondent: CIR
Facts
 Steag State Power is a domestic corporation primarily engaged in power
generation and sale of electricity to the NPC under a Build, Operate,
Transfer Scheme.
o It is registered with the BIR as a value-added tax taxpayer with Tax
Identification No. 004-626-938-000.
 In 2003, Steag State Power started building its power plant inside the
PHIVIDEC Industrial Estate-Misamis Oriental. The construction was
completed on November 15, 2006.
 During the construction period, Steag State Power filed its quarterly value-
added tax returns from the first to fourth quarters of 2004 on April 26, 2004,
July 26, 2004, October 25, 2004, and January 25, 2005. It later filed
amended value-added tax returns for the taxable quarters on December 16,
2004 and April 22, 2005.
 Likewise, for the taxable quarters of 2005, Steag State Power filed its
quarterly value-added tax returns on April 22, 2005, July 26, 2005, October
25, 2005, and January 25, 2006.
 Steag filed before BIR administrative claims for refund of its allegedly
unutilized input CAT payments on capital goods worth P670,950,937.97
o CIR’s inaction led Steag to file 2 Pets for Review on Certiorari before CTA
 First was for 2004
 Second was for 2005
o CTA 1st Div. denied for insufficiency of evidence
 First claim was late
 Second claim was premature; nonetheless, denied for failure to
prove that Steag’s purchases and importations were treated as
capital goods in its books of accounts and were subject to
depreciation
o MR w/ Motion to Submit Supplemental Evid was partially granted, and a
hearing was conducted
 CIR filed an MR against this grant
o CTA Special 1st Div. dismissed the cases for lack of jurisdiction
 Steag appealed, but CTA en banc affirmed the dismissal, relying
on CIR v. Aichi to find the appeal filed out of time
 Steag filed an MR, which CTA en banc denied
1 SECTION 112. Refunds or Tax Credits of Input Tax. -
(D) Period within which Refund or Tax Credit of Input Taxes shall be Made. - In proper cases, the
Commissioner shall grant a refund or issue the tax credit certificate for creditable input taxes within one
hundred twenty (120) days from the date of submission of complete documents in support of the application
filed in accordance with Subsections (A) and (B) hereof.
 Steag filed before SC a Pet’n for Review on Cert.
hence, this MR
 PET: CIR v. San Roque applies to its claims; alternatively, the case should be
referred to the SC en banc for its resolution
o Its claims are timely, although filed beyond the 120+30-day periods under
Sec. 112, Tax Code, because they were filed within the 2-year period in
Sec. 229, and in accordance with Revenue Regulations No. 7-95, which
establishes that appeals before the CTA may be made after the 120-day
period and before the lapse of the 2-year period
o Non-compliance with the 120+30-day period is not a jurisdictional defect
but only “lack of cause of action,” which may be subject to the equitable
principle of waiver
o The window created in the CIR v. San Roque by BIR Ruling No. DA-489-
03, which excludes from the 120+30-day periods prematurely filed judicial
claims from December 10, 2003 to October 6, 2010 — when CIR v. Aichi
was promulgated — should also extend to claims belatedly filed
 Steag’s reason: taxpayers were misled by BIR Ruling that they
had a 2-year period to file their Petitions before CTA; and even
so, Aichi and San Roque cannot be applied retroactively as it
would impair PET’s substantive rights
Issue
W/N Steag’s filing of judicial claim is timely – NO
Held
 The issue on the timeliness of respondent's filing of judicial claim is anchored on
the nature of the prescriptive periods under Section 112 of the Tax Code1
o A plain reading of this provision reveals that a taxpayer may appeal the
Commissioner's denial or inaction only within 30 days when the decision
that denies the claim is received, or when the 120-day period given to
the Commissioner to decide on the claim expires.
 Aichi Forging Company of Asia, Inc.  this Court applied the plain text of the law
and declared that the observance of the 120+30-day periods is crucial in filing an
appeal before the Court of Tax Appeals.
o CIR v. Mirant Pagbilao Corporation  claims for refund or tax credit of
excess input tax are governed not by Sec 229, but by Sec 112
o These doctrines were reiterated in San Roque Power
Corporation, where this Court stressed that Sec 112, in providing the
120+30 day periods to appeal before the Court of Tax Appeals, "must
be applied exactly as worded since it is clear, plain, and unequivocal."
In case of full or partial denial of the claim for tax refund or tax credit, or the failure on the part of the
Commissioner to act on the application within the period prescribed above, the taxpayer affected may, within
thirty (30) days.from the receipt of the decision denying the claim or after the expiration of the one hundred
twenty day-period, appeal the decision or the unacted claim with the Court of Tax Appeals.
 Petitioner's claim that it filed its judicial claims under RR No. 7-95, which
supposedly allowed claims for refund filed after the 120-day period but before the
lapse of the 2-year period, is untenable.
o First, petitioner's judicial claims were filed on April 20, 2006 and
December 27, 2006; hence, they were governed by the Tax Code,
 Moreover, RR No. 16-2005, not RR No. 7-95, was the
prevailing rule when petitioner filed its judicial claims. Its
Section 4.112-12 faithfully reflected Sec 112 of the Tax Code,
as amended by RA 9337
 It is misleading for petitioner to raise its supposed reliance in
good faith on RR No. 7-95, when the rule had already been
superseded and revoked by the time it filed its judicial claims.
o Second, under Sec 1123 of the Tax Code, only the administrative claim
for refund of input value-added tax must be filed within the 2-year
prescriptive period, the judicial claim need not be.
 In Aichi Forging Company of Asia, Inc. and San Roque Power
Corporation, the phrase "within 2 years ... apply for the
issuance of a tax credit certificate or refund" refers to
administrative claims for refund or credit filed with the CIR, not
to appeals made before the CTA
 This is apparent in Sec 112(D), Par 1 of the Tax Code, which
gives the Commissioner [120] days from the date of
submission of complete documents in support of the
application filed in accordance with Subsections (A) and (B)
within which he or she can decide on the claim.
 Sec 112(D), Par 2 provides a 30-day period within
which one may appeal a judicial claim before the CTA
 Reading together (A) and (D), San Roque Power
Corporation declared that the 30-day period does not have to
fall within the 2-year prescriptive period, as long as the
administrative claim is filed within the 2-yr prescriptive period.
o Third, the right to appeal before the CTA, being a statutory right, can be
invoked only under the requisites provided by law.
 Sec 114 of RA 1125, or the CTA Charter, provides a 30-day
period of appeal either from receipt of the Commissioner's
adverse decision or from the lapse of the period fixed by law
for action.
 Section 7(a)(2) of the CTA Charter, as amended, reads:
2 SEC. 4.112-1. Claims for Refund/Tax Credit Certificate of Input Tax. -
(d) Period within which refund or tax credit certificate/refund of input taxes shall be made
In proper cases, the Commissioner of Internal Revenue shall grant a tax credit certificate/refund for creditable
input taxes within one hundred twenty (120) days from the date of submission of complete documents in
support of the application filed in accordance with subparagraph (a) above.
In case of full or partial denial of the claim for tax credit certificate/refund as decided by the Commissioner of
Internal Revenue, the taxpayer may appeal to the Court of Tax Appeals (CTA) within thirty (30) days from the
receipt of said denial, otherwise the decision shall become final. However, if no action on the claim for tax
credit certificate/refund has been taken by the Commissioner of Internal Revenue after the one hundred
twenty (120) day period from the date of submission of the application with complete documents, the taxpayer
may appeal to the CTA within 30 days from the lapse of the 120-day period.

Sec. 7. Jurisdiction. - The CTA shall exercise:
(a) Exclusive appellate jurisdiction to review by
appeal, as herein provided:
(A)(2) Inaction by the CIR in cases involving disputed
assessments, refunds of internal revenue taxes, fees
or other charges, penalties in relations thereto, or
other matters arising under the National Internal
Revenue Code or other laws administered by the
BIR, where the NIRC provides a specific period of
action, in which case the inaction shall be deemed
a denial
o Under the CTA Charter, the Commissioner's inaction on a claim for
refund is considered a "denial" of the claim, which may be appealed
before the CTA 30 days from the expiration of the period fixed by law for
action.
o Here, since petitioner filed its judicial claims way beyond the 30-day
period to appeal, the CTA lost its jurisdiction over the Petitions.
 BIR Ruling DA-489-03 should not cover both prematurely and belatedly filed claims
for tax refund
o It expressly states that the "taxpayer-claimant need not wait for the lapse
of the 120-day period before it could seek judicial relief with the [Court of
Tax Appeals] by way of Petition for Review
o Consequently, CIR v. San Roque recognized the BIR Ruling, being a
general interpretative rule, as an exception to the strict construction of
any claim for tax exemption or refund on equitable estoppel.
o There is nothing in the same BIR Ruling that states, expressly or
impliedly, that late filings of judicial claims are acceptable.
o CIR v. Mindanao II Geothermal Partnership: late filing, or beyond the
30-day period, is absolutely prohibited, even when BIR Ruling DA-489-
03 was in force.
 Aichi ruling should be applied retroactively because it would be unjust to the other
claimants who relied on the old rule
o Interpretations of law made by courts "necessarily always have a
retroactive effect." This Court, in construing the law, merely declares what
a particular provision has always meant. It does not create new legal
obligations.
3 (A) Zero-rated or Effectively Zero-rated Sales. - Any VAT registered person, whose sales are zero-rated or
effectively zero-rated may, within two (2) years after the close of the taxable quarter when the sales were
made, apply for the issuance of a tax credit certificate or refund of creditable input tax due or paid attributable
to such sales[.]
4 SEC. 11. Who May Appeal; Mode of Appeal; Effect of Appeal. - Any party adversely affected by a decision,
ruling or inaction of the Commissioner of Internal Revenue ... may file an appeal with the CTA within thirty (30)
days after the receipt of such decision or ruling or after the expiration of the period fixed by law for action as
referred to in Section 7(a)(2) herein.
(B) Appeal shall be made by filing a petition for review under a procedure analogous to that provided for under
Rule 42 of the 1997 Rules of Civil Procedure with the CTA within thirty (30) days from the receipt of the
decision or ruling or in the case of inaction as herein provided, from the expiration of the period fixed by law to
act thereon.
 A claim for unutilized input value-added tax is in the nature of a tax exemption.
Thus, strict adherence to the conditions prescribed by the law is required of the
taxpayer.
o Refunds need to be proven and their application raised in the right
manner as required by law.
o ITC, noncompliance with the 120+30-day periods is fatal to the taxpayer's
judicial claim.

Hence, the Court of Tax Appeals En Banc properly sustained the Special First
Division's dismissal of the Petition for lack of jurisdiction.

The Motion for Reconsideration is, thus, DENIED. SO ORDERED.